Which of the following market participants tend to keep exchange rates the same in all the world markets?
A) Forward markets
B) Foreign exchange counter trades
C) Futures markets
D) Arbitrageurs

Question

Quizplus · Accepted Answer

Arbitrageurs tend to keep exchange rates the same in all the world markets by taking advantage of price discrepancies in different markets. They buy currencies where they are undervalued and sell where they are overvalued, thus equalizing the rates across the markets. The other options (forward markets, foreign exchange counter trades, and futures markets) do not directly affect exchange rates in the same way as arbitrageurs.

Which of the Following Market Participants Tend to Keep Exchange